U.K.'s Blockbuster Holiday Ads Spawn Revenue Stream for Retailers

In U.K. retailer Marks & Spencer's holiday ad, Paddington Bear saves Christmas when he inadvertently mistakes a burglar for Santa and makes him return all the gifts he has stolen.

PaddingtonMerchandise17 Credit: M&S

But could Paddington-related merchandise save M&S's holiday fortunes too? The struggling retailer (it has just announced profits down by 5% over the last six months) has hopes for a stronger Christmas with over 90 Paddington-themed products in special merchandising areas in its stores. What's more, sales of these products -- which coincide with the new "Paddington 2" movie -- so far are booming.

According to M&S, in the first 72 hours of launching the ad, by Grey London, it sold three times number of Paddington Bear toys than it would sell of a single stuffed toy across an entire year. The bear was sold out by lunchtime on the day the spot went live and the toys are changing hands on eBay for over four times the sale price, up to 50 pounds ($66).

While M&S has previously featured items of clothing or food in its Christmas ads, this year it took a completely different approach in creating a whole retail world around the ad. It's a growing revenue stream for retailers, having begun with John Lewis. The department store's much-anticipated and award-winning ads by Adam&Eve/DDB for the last few years have featured related stuffed toys, books, clothing and more. Its Monty the Penguin ad in 2015 was so successful that Monty toys were reportedly selling for up to 500 pounds ($660) online. This year's Moz the Monster is also on Ebay at 50 pounds already.

"The products are very much an addition to our campaign rather than the starting point, but from success in previous years we know that customers enjoy buying products based on the main character, or characters," says John Lewis Head of Brand Sarah Coleman. "We always ensure we make a charity donation from the sale of ad related products."

This year, even non-bricks and mortar retailers are getting in on the game. Online retailer Very.co.uk has launched a range of products, including a plush toy wolf as well as pajamas, slippers and a beanie hat based on its holiday ad, an animated tale by St Luke's in which a little girl travels to the North Pole to find Santa, with the help of the friendly wolf.

It's the first time Very has created products to go specifically with an ad campaign. "When we came up with the story, the wolf was written into the script," says Andrew Roscoe, head of brand at Very owner Shop Direct. "We did some neural research on the ad, and the most memorable moments were those with the girl and the wolf. That prompted us to think about creating the wolf as a toy."

While the aim of the merchandise was not a "massive commercial sales drive," says Roscoe, sales of the products have surpassed expectations and its supply of plush wolves is likely to run out soon. What's more, the products may also be driving new customers to the Very site. Roscoe adds: "I've seen comments on the TV ad on social media saying, 'OMG I need one of those wolves, where can I get one?'"

Other retailers selling products created on the back of their ads include discount grocer Aldi, with its Kevin the Carrot ads by McCann, and Debenhams, whose Cinderella-in-the-age-of- Instagram tale by JWT, narrated by Ewan McGregor, centers around the loss of a sparkly silver stiletto shoe (a modern day glass slipper). A real-life version of the shoe, created by designer Jenny Packham, is on sale as a limited edition.

"We decided to take a completely different approach with this ad, as it was all about making sure we convey the emotion and storytelling," says Andy Smith, creative director at JWT London. "And whatever products featured had to enhance this. So we took a leaf out of how feature films do this and designed most of the outfits bespoke for the commercial. Of course, the shoe was a pivotal component of our story and so this had to be designed specifically. "

Not all retailers are selling ad-related products however. Sainsbury's has done so in the past, with Mog the cat plush toys based on its 2015 animated ad, but this year its karaoke-style holiday spot features real people and no special products. Laura Boothby, head of broadcast communication, says that while spin-off merchandise previously has worked well for the brand, this year Sainsbury's wanted to concentrate on food, "as that's what we sell most of at Christmas."

Nevertheless, merchandise is a feature of the U.K.'s Christmas ad-fest that looks here to stay. Neil Henderson, CEO of St Luke's, which created the Very ad, says: "You never know, we could get to the stage where the product sales are paying for the advertiser's Christmas ad budget. It can only get bigger and bigger."